Emotional Ownership in Family Businesses
Traditional business advice has always been that emotion should be eliminated from business. A cool head is needed to make the decisions that will ensure an enterprise remains profitable over the long term.
However, when family owned businesses are concerned, an emotional link to the business is a prerequisite for success. Often, family members will lose interest in the business simply because they have no emotional attachment to it. Developing an ‘emotional business’ is important for all family members that already work directly within the enterprise or are about to join.
Developing Emotional OwnershipAt the heart of emotional ownership is how as a business you intend to engage with the next generation of your family that will continue to operate your enterprise. It is a qualified fact that many family businesses do not continue past their third generation. Over time, the emotional bond that a family business needs erodes until a generation of family members becomes disengaged from the business as a whole, and have no desire to operate and develop the business into the future.
It is, however, possible to re-engage with younger family members and build the emotional ownership that will promote a desire to move into the family business. Business ownership especially for family enterprises is about not just a vested interest in the commercial success of the company, but also the desire to develop the business to pass to future members of the family. High levels of emotional ownership are important to foster that desire.
One of the most important aspects of developing emotional ownership of a family business is to have family members included within the business as early as possible. Involvement by family members is vitally important to stop disinterest and even contempt becoming the overriding emotion that is felt by family members.
Many business organisations talk about ‘family capital’ within a family-based business. Within family businesses this asset becomes more important as the business develops. If you can cultivate these components of your business, family capital will thrive ensuring a stable and profitable future for the entire enterprise.
Research has indicated that the often intangible components of emotional ownership can be made real by identifying what these components are with a family enterprise. As no two businesses are the same it is crucially important to audit your own family business with the view to discovering if each family member has high or low emotional ownership of the enterprise. This will indicate whether your business could be operating on borrowed time where successive generations slowly become increasingly disillusioned with working within the family business.